UPDATE 1-NBA-Microsoft's Ballmer and Seattle group set to buy Kings-report

Reuters

* Deal worth $500 million

* Report says team will move to old Supersonics home

* Sacramento mayor desperate to keep team

By Jonathan Kaminsky and Suzanne Hurt

SEATTLE/SACRAMENTO, Jan 9 (Reuters) - A group of investors led by hedge fund manager Chris Hansen and Microsoft Corp CEO Steve Ballmer is close to a deal to buy the Sacramento Kings basketball team for $500 million and move the franchise to Seattle, Yahoo Sports reported on Wednesday.

The Maloof family, which has wrangled with the city of Sacramento for years over a new arena and held talks with other cities about moving the team, has now agreed to sell, the report said, citing league sources.

Reuters could not confirm the report. The Sacramento Kings did not immediately respond to phone calls or emails seeking comment.

Under the reported deal, the Kings would play for two seasons in KeyArena, the stomping ground of the Seattle Supersonics before the team's 2008 move to Oklahoma City, and then move into a new facility, Yahoo reported.

"I'm going to make every effort that I can possibly do to identify a potential buyer that will ensure that the Sacramento Kings remain in Sacramento," Johnson told reporters on Wednesday.

American cities often clash over sports franchises, which are seen as economic engines and a source of civic pride. The value of sports franchises has soared in recent years, largely as a result of pay television contracts.

Johnson promised to locate buyers, mentioning billionaire supermarket mogul Ron Burkle as having expressed an interest in the past.

"It appears to me for the first time that they have possibly shown a desire to sell the team, and that's what I think is significant today," Johnson said, referring to the Maloof family.

Seattle sports fans were infuriated by the loss of the Supersonics and have pined for a new NBA team ever since. Hansen last year gained city council approval for a new $490 million arena near the waterfront south of downtown.

Ballmer, the NBA and representatives for Hansen all declined to comment. Seattle city officials told Reuters they were aware of the rumors, but were not in a position to comment.

SOFTWARE AND SPORTS

Ballmer's potential involvement reflects a strong connection between the software giant and local sports.

Ballmer himself is an avid basketball fan and sometime player, who used to scrimmage regularly before work with other employees in a gym near the company's campus.

When the Supersonics moved to Oklahoma City and became the Thunder, its owner faulted Seattle officials for not coming up with a plan to replace the aging KeyArena. Many fans, though bitter, still sport Supersonics jerseys on the streets of Seattle.

Professional sports have enjoyed a recent resurgence in the city, with the NFL's Seahawks enjoying success on the field in a relatively new stadium, and the Sounders soccer team boasting the best attendance in the MLS.

Despite resistance from unions and others who fear a third stadium by the city docks will crimp freight transport, the majority of locals favor a new basketball arena and local politicians now embrace the idea.

The city council in October signed off on an agreement struck between would-be franchise owner Hansen, Seattle Mayor Mike McGinn and King County Executive Dow Constantine.

But McGinn was coy when asked about the report on Wednesday.

"I know as much as you do about the Sonics," McGinn told reporters at a re-election news conference on Wednesday. "But if it's true, ain't it cool?"

Industry observers say there are still a number of factors that could undermine any potential agreement.

Hansen has spent millions of dollars on land south of downtown Seattle to house a new arena, but locating it there is contingent upon the outcome of an environmental assessment and a review of other potential sites.

"It's not a done deal. There are discussions, I'm told," said Marc Ganis, president of consultancy SportsCorp Ltd in Chicago, who is not involved in the deal. "There are lots of unknowns. I think $500 million sounds like the right range."

The Kings have appeared to be on the brink of leaving their host city in past years.

The Maloofs opened talks with officials in Anaheim to move the team to the Orange County city in 2011, but NBA officials convinced them to give Sacramento another year to get a deal for a new arena in place. Then, last August, reports circulated that the Maloofs were talking with officials about moving to Virginia Beach, Va.

"We want to be an NBA city with an NBA team, and we want that team to be the Sacramento Kings," Johnson said on Wednesday.